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How BPM can help drive down IT Operational costs

Foreword: Recently I was doing some research into IT operational cost management and specifically how discretionary spend can be increased for use in new and innovative projects across an organisation. I came across some interesting data and have summarised some of my thoughts from a white paper I was writing on how a BPMS can support this type of initiative.

Organisations are continually under pressure to do ‘more with less’ and this is especially true in organisations where IT departments are seen by the business as being unresponsive and a cost centre, rather than ensuring innovation. This may be further exacerbated by external pressures such as competitors encroaching on existing markets and global economic challenges.

Research has shown that CIOs continually have to ensure that business demands are aligned with available IT resources and budget constraints. It is generally accepted that at least 80% of IT resources and budgets are spent on ongoing maintenance. This creates a dilemma for CIOs and IT departments who have to find ways of reducing operational costs, and designing and delivering solutions more effectively.

“78% of large enterprise budgets are swallowed in existing maintenance–keeping the lights on”
“40% of enterprise scale companies are seeing IT budgets reducing in real terms”Source: The Bathwick Group, Driving business value from IT, Dec 2007

Typical challenges IT and Business face in making effective, timely decisions and delivering valuable and cost effective transformational initiatives include:

Increased Costs: Long planning cycles delay the ability for the business to make important decisions, resulting in millions of dollars of lost opportunities. Additionally, poor information accuracy results in poor – and most of the time – costly decisions.

Diverse Data Sources:Most data and information used facilitate the decision making process is typically held in various departmental and operational systems across the organisation. These can be anything from Excel spread sheets to enterprise financial and ERP repositories. Gathering the appropriate information is often a timely and thankless exercise.

Out of Date Information: In addition to the challenge of gathering the appropriate data, ensuring it is accurate and fresh is key for making the correct decisions.

Various problems arise in specifically those processes that required adhoc and human interaction:

LOB Departments and collaborative teamstypically have a very myopic view of the tasks they perform as part of the end to end process. This results in a working practice that is not outcome focussed but rather becomes one of ‘throw it over the wall when done’ and therefore leads to a fragmented process and related data.

Data is typically held in local systems using non standard formats and therefore process stakeholders up and down stream find they have to do large amounts of clarification and potentially rework to get the information in a format they can use.

Organisation and departmental policies and procedures are also often not enforced due to the fragmentation of the process, data and the fact that there is no consistent way of ensuring business rules are applied consistently.

Processing delays and orphaned processes(e.g. loss of case files) can often result in a situation where no one knows what the current status of an activity is and therefore it just ‘drops off the radar’. This has the potential for huge legal and cost ramifications especially when large sums of money or reputational risk at stake.

Ensuring that costs are reduced in Business and IT operations requires a human to system process automation platform. It facilitates the automation of key planning, management and operational processes while enabling the integration of diverse data sources in a coherent, structured and auditable way.

Information workers, operational personnel, planners and Executives can all benefit from this BPM system in the following ways:

Automation of information gatheringData can be gathered automatically from diverse organisational systems as an integrated part of a structured business process. This ensures that data gathering,cleansing, and analysis results in a more coherent and effective data management approach. As more processes are deployed, master data sources are identified and therefore the redundant sources can potentially be removed over time.

Improved throughput, accuracy and simplificationAutomated processes inherently ensure that process execution takes place in a way that can be monitored for compliance and performance. In addition it is possible to optimised the process if bottle necks or resource issues are identified (utilising escalation and notifications).

Data is also only applied/utilised to/by the process in the context it is required and therefore superfluous data (typical of manual processing) is not present. Loss of data is reduced, ensuring that productivity is increased due to less rollbacks, rework and higher compliance with standards.

Timely answers to operational questions
Information can be readily made available to information workers, operational personnel, planners and executives during the execution of any automated process. The result is a more process centric, coherent and integrated alignment between business needs and IT resources/information,ensuring a more accurate and predictable outcomes and decisions.

Operations value ensuring improved strategic benefits
Automation ensures there is end to end process visibility and consistency enabling participants to work in a structured and predictable way. This process centric approach has the potential to deliver tangible benefits for both business and IT operations.

The benefits of predictable, consistent processes and information can be extended to strategic planning, thereby exploiting the investment in a BPM Platform to make the organisation more agile in response to internal and external demands.